Cryptocurrency: The Future of Money?

Today's financial landscape is changing rapidly. Just twenty years ago, the idea of money being exchanged online was unheard of. Now convenient and cost-effective internet payments are commonplace. 

Virtual currencies are defined as peer-to-peer systems which allow their users to transfer "value" between one another by sending funds over the global network that connects all computers using the virtual currency software. 

A virtual currency can serve any number of purposes as in crypto news, but most commonly facilitates transactions related to goods or services on websites that recognize it as a valid form of payment.

How Does Cryptocurrency Work?

There are two main ways for an online transaction to occur: on a centralized network like PayPal or Visa (credit cards), or on a decentralized network like Bitcoin. A decentralized network, as the name suggests, is one that shares power between its users rather than having all control centralized in one place.   

Decentralized networks are not controlled by any individual or central entity, but instead run on thousands of computers at once. The technology powering these networks was first introduced by cryptographer David Chaum back in 1982 and has gone through many iterations since then to improve security and privacy.

Cryptocurrency software typically operates with an associated virtual currency which can be traded or used to buy goods online. Transactions occur instantaneously within the peer-to-peer network nearly for free, anywhere around the world, without needing a bank account or credit card number. Additionally, all transactions are pseudo-anonymous which makes the identity of the parties involved untraceable.

What Are Some Advantages of Cryptocurrency?

Of course, any new technology creates some problems. If something sounds too good to be true…well, you know what they say. The main advantages of cryptocurrency are convenience and cost-effectiveness for both users and merchants. It would not be an exaggeration to suggest that cryptocurrency will eventually become the preferred method of digital payment due to its cutting edge design and sheer simplicity.

Many people are wary about using their financial information online given the number of data breaches over the past few years. These attacks have revealed millions of credit card numbers, Social Security Numbers, email addresses, passwords, etc., leaving many consumers feeling uneasy about using their information to make purchases. Digital currency does not require any financial information, making it an ideal solution for people who are concerned about data theft or identity theft online.

Sites that recognize cryptocurrency as a valid form of payment do not store your credit card number or bank account information, leaving them with no valuable data to steal if their system is compromised. All the money stored in the virtual currency network is associated with unique addresses known only by each key holder which makes hacking virtually impossible, unless someone physically steals your computer and has access to your digital wallet file.
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